The High Court in Kampala has dismissed an application filed by Sunshare Investment Company Limited challenging a tax assessment of over UGX 2.46 billion by the Uganda Revenue Authority (URA), ruling that the dispute falls outside its jurisdiction and properly belongs before the Tax Appeals Tribunal.
The case, Miscellaneous Cause No. 216 of 2023, was decided by Justice Isaac Bonny Teko following a judicial review application in which Sunshare Investment Company Limited sought to overturn URA’s decision communicated in a letter dated 1st August 2023.
The company had asked the court for several remedies, including a declaration that URA’s assessment was illegal, biased and procedurally improper. It also sought to quash the tax demand, arguing that URA had relied on bank transactions belonging to individual employees rather than the company’s official financial records.
The applicant further claimed the assessment violated constitutional protections, including the right to privacy and fair hearing, and requested an injunction stopping enforcement of the tax demand.
Sunshare Investment Company Limited, through its director Ping Zhuang and tax consultant Birusya Venny, maintained that the company had already been audited for the period between July 2017 and June 2021 and had fully paid all assessed taxes.
They argued that the new additional assessment was unlawful and based on flawed data drawn from personal bank accounts and mobile money transactions unrelated to company operations. The applicant also accused URA of ignoring allowable expenses and deductions.
However, URA strongly opposed the application, insisting that its investigations were lawful and conducted within its statutory mandate. Through its officer Sheba Tayahwe, URA told the court that investigations into juice and fuel sales revealed significant discrepancies in declared income.
The authority maintained that sales proceeds had been deposited into accounts belonging to employees and suppliers, which upon verification were linked to the company’s business activities. URA further argued that the total undeclared revenue amounted to over UGX 6.5 billion, justifying the tax liability of UGX 2.46 billion.
URA also told the court that the applicant had been given opportunities to challenge the findings through objections and alternative dispute resolution mechanisms, but failed to provide sufficient evidence to overturn the assessment.
Before addressing the merits of the case, the court first considered preliminary objections raised by URA, including lack of jurisdiction and failure to exhaust alternative dispute resolution mechanisms provided under tax law.
Justice Teko agreed with URA’s position, holding that although the application was framed as a judicial review matter, the substance of the dispute concerned tax assessment, valuation and computation.
The judge noted that the applicant was essentially challenging how URA arrived at figures relating to undeclared revenue, which is a matter reserved for the Tax Appeals Tribunal under the Tax Appeals Tribunal Act and the Tax Procedures Code Act.
The court further emphasized that judicial review is limited to examining the legality of decision-making processes and not the merits of tax assessments. It found that allowing the case to proceed would effectively turn the High Court into a tax assessment forum, contrary to the legal framework established by Parliament.
Citing established legal principles on jurisdiction, Justice Teko ruled that the High Court lacked authority to entertain the matter. He therefore upheld the preliminary objection, dismissed the application in its entirety, and awarded costs to URA.
As a result, Sunshare Investment Company Limited has been directed to pursue any further challenge through the Tax Appeals Tribunal, the legally designated forum for resolving such tax disputes.
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